BEIJING/WASHINGTON: US President Donald Trump threatened to impose a 10 per cent tariff on $200 billion of Chinese goods and Beijing warned it would retaliate, in a rapid escalation of the trade conflict between the world’s two biggest economies.
Trump’s latest move, as Washington fights trade battles on several fronts, was unexpectedly swift and sharp.
It was retaliation, he said, for China’s decision to raise tariffs on $50 billion in US goods, which came after Trump announced similar tariffs on Chinese goods on Friday.
“After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced,” Trump said in a statement on Monday.
The comments sent global stock markets skidding and weakened both the dollar and the Chinese yuan on Tuesday. Shanghai stocks plunged to two-year lows.
China’s commerce ministry said Beijing will fight back with “qualitative” and “quantitative” measures if the United States publishes an additional list of tariffs on Chinese goods.
“Such a practice of extreme pressure and blackmailing deviates from the consensus reached by both sides on multiple occasions,” the ministry said in a statement.
“The United States has initiated a trade war and violated market regulations, and is harming the interests of not just the people of China and the US, but of the world.”
US business groups said members were bracing for a backlash from the Chinese government that would affect all American firms in China, not just in sectors facing tariffs.
Jacob Parker, vice-president of China operations at the US-China Business Council in Beijing, said China would undoubtedly “begin looking at other ways to enforce action against US companies that are operating in the market.”
Some companies have reported Beijing is meeting with Chinese businesses to discuss shifting contracts for US goods and services to suppliers from Europe or Japan, or to local Chinese firms, Parker said.
Washington and Beijing appeared increasingly headed towards open trade conflict after several rounds of talks failed to resolve US complaints over Chinese industrial policies, lack of market access in China and a $375 billion US trade deficit.
US Trade Representative Robert Lighthizer said his office was preparing the proposed tariffs and they would undergo a similar legal process as previous ones, which were subject to a public comment period, a public hearing and some revisions.
He did not say when the new target list would be unveiled.
“As China hawks, like Lighthizer and (Peter) Navarro, appear to have gained power within the Trump administration lately, an all-out trade war now seems more inevitable,” said Yasunari Ueno, chief market analyst at Mizuho Securities in Japan.
On Friday, Trump said he was pushing ahead with a 25 per cent tariff on $50 billion worth of Chinese products, prompting Beijing to respond in kind. — Reuters
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